Is There Chronic Excess Supply of Labor? Designing a Statistical Test

13 Pages Posted: 27 Jun 2007 Last revised: 19 Aug 2010

See all articles by Richard E. Quandt

Richard E. Quandt

affiliation not provided to SSRN

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 1985

Abstract

In this paper we present and implement a statistical test of the hypothesis that the labor market has chronic excess supply. The procedure is to estimate a disequilibrium labor market model, and construct a test statistic based on the unconditional probability that there is excess supply each period. We find that the data reject the hypothesis of chronic excess supply. Hence, one cannot assume that all observations lie on the demand curve.

Suggested Citation

Quandt, Richard E. and Rosen, Harvey S., Is There Chronic Excess Supply of Labor? Designing a Statistical Test (April 1985). NBER Working Paper No. t0046, Available at SSRN: https://ssrn.com/abstract=994218

Richard E. Quandt (Contact Author)

affiliation not provided to SSRN

No Address Available

Harvey S. Rosen

Princeton University - Department of Economics ( email )

001 Fisher Hall
Princeton, NJ 08544
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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